Lesson 3 of 4 · All lessons in this module
This lesson is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 3 of 4 · 15 min
Standard VI(B) and VI(C) cases: who trades first and who gets paid
Clients first, employer second, yourself last; personal trades must neither disadvantage clients nor use their information, and any payment or benefit for a recommendation, in either direction, must be disclosed before the client signs.
In short
- VI(B) order: client transactions, then employer, then personal accounts in which you are a beneficial owner. Personal trades come only after clients and employer have had adequate opportunity to act.
- Personal investing is not wrong in itself: the client is not disadvantaged, you do not profit from trades made for clients, and rules are followed. The same tests govern a sale against the firm's view.
- Beneficial ownership reaches family accounts and accounts where you have a financial interest. A family member's client account is treated like any other: neither favoured nor disadvantaged.
- Procedures: limit IPOs and private placements, blackout periods, preclearance, holdings reports at hire and at least annually, duplicate confirmations and meaningful disclosure of the policy.
- VI(C): disclose to employer, clients and prospects any compensation or benefit paid or received for referrals, including services, commissions and internal bonuses, with its nature and estimated value, before the agreement.
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